IFPI Digital Music
Report 2013
Engine of a digital world
9 in 10 most
liked people
on Facebook
are artists
9 in 10
of the most
watched videos
on YouTube
are music
7 in 10 most
followed
Twitter users
are artists
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Contents
Introduction 4-5
Music is an engine of the digital world 22-23
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PlГЎcido Domingo, chairman, IFPI
Frances Moore, chief executive, IFPI
An industry on the road to recovery:
Facts and figures 6-10
Global best sellers 11-13
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Top selling albums
Top selling singles
Strong local repertoire sales
Digital music fuels innovation 14-17
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Download stores receive a boost from the cloud
Subscription services come of age
Subscription transforming the industry’s business model
Growth for music video
The next generation radio experience
Europe: Licensing helps digital consumers
The art of digital marketing 18-21
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One Direction mobilise an online army
Dance label harnesses social media
A personal video for every fan: Linkin Park
Taking classical digital
Fuelling digital engagement
Fuelling hardware adoption
Driving the live entertainment industry
Attracting customers, driving profits
Going global: the promise of emerging markets 24-27
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Brazil: A market set to surge
Russia: Hurdles to growth can be overcome
India: Nearing an all-time high
Strong market potential in The Netherlands
Engaging with online intermediaries 28-30
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Advertising: tackling a major source of funding for music piracy
Search engines – a vital role to play
Further ISP cooperation needed
Payment providers step up action on illegal sites
Disrupting illegal online businesses 31
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Disrupting unlicensed cyberlockers
Reducing pre-release leaks
Digital music services worldwide 32-34
Cover photo credits: Michel TelГі. Photo by Fernando Hiro. Adele. Photo by Mari Sarii.
PSY. Photo by Universal Music. Lady Gaga. Photo by Meeno. Michael BublГ©. Photo by WMG.
The report includes new findings from a consumer study carried out by Ipsos MediaCT, commissioned by IFPI.
7,502 interviews were conducted using an online survey method in November 2012, amongst a representative sample of internet users aged 16-64 in the following countries:
USA (1,000 interviews), Brazil (1,002), Mexico (499), UK (1,000), France (1,000), Germany (1,000), Sweden (501), Japan (1,000), South Korea (500). These nine countries
represent 80 per cent of global recorded music sales (source: IFPI). Results have been weighted to represent the population of internet users aged 16-64 years in each country.
В© IFPI 2013. All data, copy and images are subject to copyright and may not be reproduced, transmitted or made available without permission from IFPI.
www.ifpi.org
@ifpi_org
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3
Demand for music is
driving the digital world
PlГЎcido Domingo, chairman, IFPI
It is my pleasure to introduce the tenth edition of IFPI’s Digital Music
Report. The report explains just how much recorded music is helping
drive today’s digital economy and highlights the new and exciting
ways consumers can access and experience music.
There is a growing digital economy built around music. A huge variety
of download stores, subscription services and streaming offerings
are available. They provide music fans with access to millions of
tracks from artists around the world. We also see social networks and
online video channels expanding fast. Music is also helping drive the
enormous popularity of devices, from smartphones to headphones.
It is the continuing investment, nurturing and promotion of
artistic talent that makes all this possible. Consumers want to enjoy
professionally produced content of a high standard. They want to
be guided towards discovering the best new music being made.
PlГЎcido Domingo. Photo by John Marshall
“I believe passionately
in the right of artists
to earn a living from
their craft.”
The internet gives artists from around the world an unprecedented
platform to reach music fans wherever they may be. And the music
industry has harnessed this potential. Testament to this fact is the
presence of artists from Brazil to South Korea in IFPI’s global chart
of top selling singles.
I believe passionately in the right of artists to earn a living from their
craft. It is only if artists, and those that invest in them, have their
rights promoted in the digital environment that they can continue to
make the music we all love. Copyright is the key ingredient to ensure
this. Policymakers around the world are now debating how best to
protect artists’ rights in the digital age. It is important they are able
to ensure that copyright is respected in the digital environment, so
that musicians can continue to develop as artists and the recording
industry can grow and be able to invest in their careers.
I was fortunate at the beginning of my career to have worked
with many amazing people who helped me develop as an artist.
Today, I work to help nurture young talent, through my international
Operalia competition and the young artists’ programmes I started at
the Washington, Los Angeles and Valencia Opera Companies. I want
these young talented performers to enjoy the same opportunities
I benefited from as I launched my career. We can achieve this if
copyright is respected and protected. And that can only be good
news for true music fans.
Follow PlГЎcido Domingo on Twitter at @PlacidoDomingo
4
Music: on the road to recovery
and fuelling the digital economy
Frances Moore, chief executive, IFPI
Just one year ago we published our IFPI Digital Music Report
under the headline “optimism justified, complacency not accepted”.
One year on, the optimism does not seem to have been misplaced.
The music industry has achieved its best year-on-year performance
since 1998. The direction of travel towards growth is clear. For the
global music business, it is hard to remember a year that has begun
with such a palpable buzz in the air.
There is plenty of good news for our business going into 2013.
First, our expansion has gone truly global. The new digital services
developed and licensed over recent years are moving rapidly into
new markets across the world. Just two years ago, the largest
international digital services, such as iTunes, Spotify and Deezer,
were present in just over 20 countries. Today, they are in more than
100. These include fast-growing emerging markets, such as Brazil,
India and Russia with the potential to drive future growth.
Record companies’ strategies of proactively licensing across different
revenue channels are paying dividends, too. Most revenue streams –
downloads, subscription, advertising-supported, video, performance
rights, synch – are growing. In some markets, such as India, Norway,
Sweden and the US, digital has outstripped physical revenues, and
more will follow. This has helped nearly half of our top 20 markets achieve
growth in 2012.
There is good news for music fans too. As the Ipsos MediaCT consumer
research cited in this report illustrates, consumers like the offerings
our industry is providing. Today’s legitimate services are a compelling
alternative to piracy – not just for the industry, but for the consumer too.
These are hard-won successes for an industry that has innovated,
battled and transformed itself over a decade. They show the music
industry has adapted to the internet world, learned how to meet
the needs of consumers and monetised the digital marketplace.
There is another key theme to this report. Music has not only
adapted to the internet - it is at the very heart of its development.
Music is driving technology, helping sell devices, fuelling economic
growth with a ripple effect far beyond the limits of the recorded
music market. It is helping drive online search and social networking,
as well as demand for fast broadband connections. Music is creating
economic value at virtually every level of life. It is an engine of the
digital ecosystem.
Despite the optimism, there remain enormous challenges.
First, our markets remain rigged by illegal free music. We can make
a huge difference to this situation if we have more cooperation
from advertisers, search engines and other intermediaries.
These companies are not only helping direct consumer traffic
and advertising revenues to illegal sites – they are themselves
financially benefitting from piracy.
In 2012, we saw an encouraging commitment on the part of search
engines to prioritise legal music sites; however, little in reality has
“The music industry has
adapted to the internet world,
learned how to meet the needs
of consumers and monetised
the digital marketplace.”
changed to date, and in 2013 we look for tangible results in this area.
We will also look to make 2013 the turning point in our cooperation
with the advertising sector. Major brands must no longer consider
it acceptable to help fund illegal music sites that tarnish their own
reputation, as well as helping rig the music market.
Second, a crucial debate is looming in many centres of governments
around the issue of copyright reform. Copyright rules have provided
the foundation for our industry to reinvent itself in the digital world.
Any suggestion of change should be based on rigorous evidence
that there is in fact a problem. A weakening of copyright rules would
set back the music industry at the very moment when it is on the
path to recovery. The real priority, in our view, should be to make sure
existing copyright rules are properly enforced.
This year’s Digital Music Report reflects the growing optimism felt
across the music business internationally. We are on the path to
recovery and driving the digital economy. These are hard-won
achievements – we will be pushing to build on them in 2013.
5
An industry on the road to
recovery: Facts and figures
The recorded music market continues its path towards recovery.
Industry revenue streams are diversifying. Digital services are
rapidly expanding the global audience for recorded music.
Existing services are improving in quality and consumer experience
and drawing in large numbers of new users. An explosion of new
connected devices allows consumers to enjoy music in more
convenient ways than ever before.
The global trade value of the recorded music industry grew by
0.3 per cent in 2012 – the best result since 1998 and a sign that the
improvement in market conditions seen in 2011 has been sustained.
At least eight of the top 20 markets are expected to see growth.
These include Australia, Brazil, Canada, India, Japan, Mexico,
Norway and Sweden.
Income from download sales, subscription services, music video
streaming, digital radio, performance rights and synchronisation
revenues are all seeing growth.
We have plenty to do and some amazing
opportunities ahead of us. Until recently, the vast
majority of our revenues came from a handful of
countries. Today, digital channels mean we can
monetise markets worldwide much more effectively.
Stu Bergen, executive vice president, international
and head of global marketing, recorded music,
Warner Music Group (WMG)
We can see growth happening already from
Brazil to Scandinavia, Canada to India. We think this
is the start of a global growth story for the industry.
Edgar Berger, President and CEO,
International, Sony Music Entertainment
Digital music drives innovation
The recording industry has licensed a range of services that are
now operating around the world, offering consumers increasingly
sophisticated ways to experience music. Increased competition has
driven a new wave of innovations in the sector. Key recent examples
include the launch of cloud-based services with scan and match
features; more and improved mobile applications; improved
smart radio tools; and added social features, such as Facebook
and Twitter integration.
Digital music consumption has now become mainstream; as
shown by consumer research by Ipsos MediaCT across nine markets.
Two-thirds of internet users aged 16-64 surveyed (62%) engaged
in some legitimate digital music activity in the past six months.
Global digital revenues (US$ billions)
Record companies’ digital revenues for
2012 are estimated at US$ 5.6 billion, up an
estimated 9 per cent on 2011 and accounting for more than
a third of total industry revenues (34%). Digital channels account
for the majority of income in an increasing number of markets
including India, Norway, Sweden and the US.
Digital retailers are continuing their rapid global expansion.
At the start of 2011, the major international services were
present in 23 countries. Two years later, they are in more than 100.
Many countries, such as Kenya, Sri Lanka and Vietnam saw their first
digital music service open in 2012. Globalisation is opening up new
markets, with record companies now able to reach consumers
in territories where there was little previous retailing infrastructure.
There are now more than 500 licensed digital music services
operating worldwide, offering 30 million tracks to consumers.
6
4.3
2008
4.7
2009
4.8
2010
5.1
2011
5.6
2012
Source: IFPI
For many years licensed music services have had to compete for
consumer appeal with unlicensed alternatives. Despite the unfair
nature of the competition, consumer satisfaction with licensed
services is now demonstrably at high levels. Ipsos MediaCT research
shows that on average internationally, 77 per cent of users of legal
services judge them “excellent”, “very good” or “fairly good”.
A diverse market
Download stores continue to see steadily growing sales and are
spreading globally. They represent around 70 per cent of global
digital revenues. Major technology players – Amazon, Apple, Google,
and Microsoft – have joined the market or upgraded their services.
Download sales increased by 12 per cent in 2012, to 4.3 billion
units globally (combining digital singles and albums). Digital album
sales grew at more than twice the pace of single tracks. There were
2.3 billion single track downloads worldwide, an increase of 8 per
cent and 207 million digital albums sold, up 17 per cent on 2011,
showing consumer demand for albums remains strong. Stu Bergen,
executive vice president, international and head of global marketing,
recorded music at Warner Music Group (WMG) says: “Although every
performer is different, many artists’ work is better encapsulated
in a full length album. We always need to ensure that we are
breaking artists, not just songs.”
Download unit
sales + 12%
Paying subscriber
numbers + 44%
62% of internet users
use licenced services
Subscription services are now an integral part of the recorded
music market, with 20 million paying subscribers globally in 2012 –
an increase of 44 per cent on 2011. Subscription services are
expected to have crossed the 10 per cent mark as a share of
total digital music revenues in 2012 for the first time. This share
is considerably higher in Europe, around 20 per cent, helped by
explosive growth in Scandinavia. Figures from Ipsos MediaCT
reveal that subscription models are now the dominant type
of digital music service in some countries.
Subscription services compete with download stores
48%
41%
36%
33%
19%
19%
25%
19%
South Korea
10%
12%
10%
11%
Sweden
28%
France
4%
UK
USA
Germany
Japan
Used subscription service (free/paid)
Paid to download
Source: Ipsos MediaCT % internet users, active past 6 months
7
The Norwegian music market rose 7% in 2012 due to streaming.
This is the first year with an increase since 2004.
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Music in the clouds, people on the ground.
WiMP is a new kind of music streaming service focused on delivering high value local and international
editorial content curated by music lovers. Finally the record store you used to love has joined you in the sky.
WiMP is currently live with 20 million tracks on all important devices in Norway, Sweden, Denmark, Germany
and Poland. Coming soon to a country near you. [email protected].
www.wimpmusic.com
8
What drives digital music fans?
Consumer satisfaction with licensed services is demonstrably high.
Research by Ipsos MediaCT finds that even the majority of those
who use pirate sites (57%) believe “there are good services available
for legally accessing digital music“. The research also reveals the key
factors driving the popularity of download services: first, security/
ease of payment; second, the guarantee that the service is legal; third,
because they trust the brand/company. Users of subscription services
pointed to the ability to discover new music, their free of charge
tier of offerings and the ability to listen to music without needing to
purchase individual songs. The ability to listen to music for free and
the discovery element were also key driving factors for music video
streaming services and internet radio services. The findings show that
legal music services are getting better at meeting distinct consumers’
needs. However, this environment is still affected by the unfair
competition offered by unlicensed services which undermines the
kind of market conditions that would maximise innovation in music
production and distribution.
Music video streaming services are also seeing strong growth.
YouTube, the most popular digital video service, has more than 800
million active users globally. Nine in 10 of the most popular videos
on the service are music related, and the specialised music video
services, VEVO and Warner Music Sound, are two of the top three
channels on YouTube.
Internet radio is also soaring in popularity, with leading service
Pandora already accounting for 8 per cent of all radio listening
in the US. Services such as Slacker and iHeartRadio are also
growing in popularity.
Although the industry is less reliant on income from physical format
sales, with their share declining from 61 per cent in 2011 to an
estimated 58 per cent in 2012, physical still accounts for the majority
of industry revenue. Some markets in Asia bucked the declining
global trend in revenues from physical formats. In Japan, CDs and
DVD music video sales increased strongly, despite a weak digital
sector, while in South Korea sales are expected to have increased for
the third consecutive year, underpinned by K-Pop acts whose fans
predominantly want high-quality physical formats. Gifting and deluxe
box sets are increasingly vital to the physical format market.
Performance rights income - revenues generated from the use
of music in TV and radio broadcasts, and public performance in
venues such as bars, nightclubs, restaurants and shops – continues
to increase. The sector grew by 9.3 per cent in 2012, and accounts
for 6 per cent of total industry revenues globally and as much as
10 per cent in Europe and Latin America. A glaring anomaly exists in
this market, however, due to the lack of a broadcast right in the US.
This deprives performers and producers in the US of income they
are entitled to in virtually every other country of the world.
Music fans are also becoming more aware of the choice of
legitimate services that are on offer. Ipsos MediaCT findings
across nine countries show close competition for visibility
between the major international services.
High consumer awareness of licensed services
90
% internet users aware of the following services
(average across countries where services are available)
70*
68
56**
32
31***
* 84% aware in USA ** 96% aware in Sweden *** 75% aware in France
Countries where available: Spotify – USA / UK / France / Germany / Sweden. Vevo – USA / Brazil / UK / France
Deezer – Brazil / Mexico / UK / France / Germany. Amazon MP3 – USA / UK / Germany
Source: Ipsos MediaCT
9
Music is driving a broader economy
Recorded music is helping fuel a range of industries, from social
media platforms to radio broadcasters, headphone to handset
manufacturers, live concert promoters to bars and nightclubs. As a
simple illustration of music’s influence on the digital world, nine of
the 10 most viewed videos on YouTube are music videos. It is record
companies’ continuous investment in artists and repertoire (A&R)
that sustains the supply of new music on which this broader
economy depends.
Untapped potential
The music industry and its retail partners are working to develop
new territories and to expand existing markets. A number of key
factors are important in realising this potential: above all, a strong
label scene with investment in local repertoire; a healthy retail sector
with great digital services and investment in innovation; an advanced
technology infrastructure; and a positive copyright environment with
a robust legislative framework to support licenced services.
The copyright environment is vital to the industry’s prospects.
To improve it, music companies are engaging with a range of
intermediaries - including advertisers, search engines, ISPs, mobile
operators and payment providers - to make the internet a more
conducive place for legitimate digital commerce. Recognising there
needs to be a level playing field for licensed services to develop
and thrive, the industry seeks to disrupt the illegal business models
supporting unlicensed services, make it harder for consumers to
find and access illegal content, educate them on the legal alternatives
and help migrate internet users to licensed digital music services.
Illegal free music remains an enormous obstacle to future growth
of legitimate music markets. IFPI estimates that around one-third
of internet users globally (32%) still regularly access unlicensed sites.
Top sellers of 2012
The global albums and singles charts of 2012 reflect an industry
investing in local talent and breaking it to a global audience.
The singer-songwriter Adele has seen enormous global success
for her album 21, selling 8.3 million units in 2012 alone. The top
selling single of 2012 was the Canadian artist Carly Rae Jepsen’s
Call Me Maybe, which sold more than 12.5 million units worldwide.
Meanwhile, local repertoire dominates the album charts in many
major markets.
Adele. Photo by
10
Mari Sarii.
Global best selling
artists of 2012
The global albums and digital singles charts of 2012 reveal a recording
industry that is investing in local talent and breaking it to a global
audience. While English-language albums continue to sell well
across borders, analysis of the charts in leading markets including
France, Germany, Italy, Spain and Sweden reveals the vast majority
of the top 10 selling albums of 2012 were local repertoire. The singles
chart demonstrates the modern breakout hit can come from any
corner of the globe.
Top selling global albums
British singer-songwriter Adele achieved phenomenal success with 21,
first released in January 2011, selling 8.3 million units globally in 2012 and
18.1 million in 2011. The album is the first to top the global albums chart
for two consecutive years since IFPI began reporting global best sellers in
2001, and went to number one in more than 26 countries.
US artist Taylor Swift took the second spot with Red, her fourth studio
album, reaching sales of 5.2 million. Red topped the charts in countries
from the US to Taiwan. The album spent six non-consecutive weeks at
the top of the Billboard 200, making Swift the first artist since The Beatles
to achieve six weeks at the top of the US chart with three consecutive
studio albums.
Taylor Swift. Photo by Brian Doben.
UK/Irish band One Direction achieved phenomenal international success
in 2012. Their debut album Up All Night was the third best selling title of
the year and their second album Take Me Home became a best-seller in
35 countries, ranking it fourth in the global chart.
On average, one in five units of the top selling albums (21%) were
bought in a digital format, with One Direction’s Up All Night seeing
38 per cent of its units sold digitally.
Global top selling albums of 2012
One Direction. Photo by John Urbano.
ARTIST
TITLE
1
ADELE
21
8.3
2
TAYLOR SWIFT
RED
5.2
3
ONE DIRECTION
UP ALL NIGHT
4.5
4
ONE DIRECTION
TAKE ME HOME
4.4
5
LANA DEL REY
BORN TO DIE
3.4
6
P!NK
THE TRUTH ABOUT LOVE
2.6
7
ROD STEWART
MERRY CHRISTMAS, BABY
2.6
8
RIHANNA
UNAPOLOGETIC
2.3
9
Mumford & Sons
Babel
2.3
MAROON 5
OVEREXPOSED
2.2
10
TOTAL SALES (M)
Source: IFPI.
11
Gotye. Photo by Søren Solkær Starbird.
Top selling global singles
K-Pop star PSY’s Gangnam Style was the third best-selling hit of the
year, as well as being a YouTube phenomenon with more than 1.2
billion views to date. Gangnam Style is the most successful
of a recent wave of K-Pop hits that have broken internationally.
South Korea’s music sector has attracted heavy investment since
its government overhauled its copyright laws in 2007, a move
which helped the country soar from the 23rd largest recorded
music market worldwide in 2007 to the 11th largest in 2012.
Canadian artist Carly Rae Jepsen topped the 2012 global
singles chart with Call Me Maybe which sold 12.5 million units.
Jepsen had first shot to fame in 2007, when she came third on
Canadian Idol. An album followed, but it was Call Me Maybe,
released in 2012 that propelled her onto the global stage, topping
the charts in more than a dozen countries. The track received massive
publicity when fellow Canadian Justin Bieber promoted it to his
30 million Twitter followers and uploaded a parody of the video
on YouTube which garnered more than 50 million views worldwide
on the video streaming channel.
Brazilian singer-songwriter Michel TelГі achieved a global hit with Ai
Se Eu Te Pego. Sung in Portuguese, the song broke language barriers
to sell 7.2 million copies, helped by football stars adapting the dance
and performing it as a goal celebration. This helped the hit go viral
on YouTube, attracting almost half a billion views and becoming one
of the top 10 most viewed videos. The song reached number one
in 23 countries in Europe and Latin America. TelГі became the first
Brazilian solo artist in five decades to have a song in the US Billboard
Hot 100 chart.
Gotye’s Somebody That I Used To Know was the second best-selling
single of 2012, with 11.8 million sales. Belgian-born and based in
Australia, Gotye released his first album in 2003. Somebody That I Used
To Know, which featured New Zealand singer-songwriter Kimbra,
topped the iTunes charts in 46 countries. Its international popularity
was boosted by its quirky video and when artists such as Katy Perry
and Lily Allen promoted it to their followers on Twitter.
The digital singles chart includes artists from Australia, Brazil, Canada,
South Korea, Trinidad and the US, showing how the internet makes
it possible for artists to break out of their local markets and achieve
global hits.
Global top selling digital singles of 2012
ARTIST
TITLE
TOTAL SALES (M)
1
CARLY RAE JEPSEN
CALL ME MAYBE
12.5
2
GOTYE
SOMEBODY THAT I USED TO KNOW
11.8
3
PSY
GANGNAM STYLE
9.7
4
FUN
WE ARE YOUNG
9.6
5
MAROON 5
PAYPHONE
9.1
6
MICHEL TELГ“
AI SE EU TE PEGO
7.2
7
NICKI MINAJ
STARSHIPS
7.2
8
MAROON 5
ONE MORE NIGHT
6.9
9
FLO RIDA
WHISTLE
6.6
10
FLO RIDA
WILD ONES
6.5
Source: IFPI.
The entire world is connected through the internet
and people choose what music they want to listen
to. There is more choice than ever before and this
can be both an opportunity and a challenge for
artists. But a hit is a hit and people feel the music no
matter what language, the rhythm or anything else.
Michel TelГі
12
Michel TelГі. Photo by Fernando Hiro.
Carly Rae Jepsen. Photo by Reid Rolls.
PSY. Photo by Universal Music.
Strong local repertoire sales
Album charts in most markets show that investment in local
repertoire is alive and well. In many countries, local repertoire
accounts for the vast majority of the top selling albums of the year.
Five major non-English language markets illustrate this. In Italy,
Spain and Sweden, eight in 10 of the top selling albums of 2012
were by local artists, in Germany the figure was seven in 10, and in
France six in 10.
Local repertoire dominates in many markets
country
% of Top 10 albums in 2012
that were domestic repertoire
italy
80
spain
80
sweden
80
GERMANY
70
FRANCE
60
Source: IFPI.
Fun. Photo by Lindsey Byrnes.
13
Digital music
fuels innovation
Digital music is fuelling innovation as retailers upgrade their services
and add new features and functionality that ensure licensed
services offer an overall better user experience than their unlicensed
alternatives. Key innovations in 2012 included the expansion
of cloud-based services with scan and match features; more
and improved mobile applications; better smart radio tools; and
added social functionality such as deeper Facebook integration.
Download stores receive a boost from the cloud
Downloading remains a popular way of accessing music digitally.
Many existing services announced international expansion plans
and the rollout of cloud-based features in 2012. Amazon, Apple,
Google and Microsoft all enhanced their music services with cloudbased features. These provide customers with access to their entire
music collections – integrating downloaded and �sideloaded’ tracks
into one collection – wherever they are, and on whatever device.
Consumer research in suggests this is a key feature for music fans. A
UK study shows that 66 per cent who own multiple devices saying it
is “very important” to access content across all of them, while three
in five (59%) said they access content more frequently because it is
seamlessly available (Wiggin 2012 Digital Entertainment Survey).
Apple has simplified the design of its iTunes store and introduced
integration with iCloud, which is used by 190 million people (Apple).
iCloud Play enables users to stream their iTunes purchases to
any Apple device, automatically adding new purchases into
their libraries, while iTunes Match can host songs not purchased
from the iTunes store in iCloud for US$ 24.99 per year.
Following its launch in the US, Amazon rolled out its Cloud Player
scan and match service in France, Germany, Italy, Spain and the UK.
Music libraries are scanned and matched to the 20 million tracks
in Amazon’s catalogue and can be played on any device. Similar
to iTunes Match, Amazon’s Cloud Player provides remote access to
collections for US$ 24.99 per year.
The shift to the cloud could be as significant for
the consumer as the shift from physical product
to digital consumption. It provides a level of
convenience around our content that is increasingly
difficult for unlicensed services to replicate.
Stephen Bryan, executive vice president, digital strategy
and business development, Warner Music Group (WMG)
14
Pirate services are clunky and old-fashioned
compared to the legal services available. They’re
being usurped by mass consumer migration to
smartphones and access to millions of tracks
from legitimate subscription services. Consumers
can also tap into their social network and see
what their friends and family are listening to.
The pirate option just cannot offer that complete
consumer experience.
Rob Wells, president, global digital business,
Universal Music Group (UMG)
In October 2012, Google launched a
scan and match service in France, Germany,
Italy, Spain, the UK and the US. Xbox Music from Microsoft
also launched in October, offering a seamless music service
on any device, including the Xbox 360 games console. The service
offers the choice of a subscription service �Xbox Music Pass’ for
US$ 9.99 per month, or free on any Windows 8 device, as well
as the option to download tracks on demand.
Subscription services come of age
Subscription services are the fastest growth area in digital music, with
subscriber numbers up 44 per cent in 2012 and revenues up 59 per
cent in the first half of 2012. They are driven by successful bundling
deals with ISPs and mobile operators, an improved user experience,
integration with social networks and a greater variety of price points.
Spotify is a growing international brand with more than five million
paying subscribers, up from three million in 2011. Spotify is the
second largest source of digital music revenue in Europe and
in some countries – Finland, Norway and Sweden – the largest.
The migration of users from the free to the paid-for service has
been central to the success of subscription. Spotify says 20 per cent
plus of active users convert
to the paid premium
service. This ratio
20%+ Spotify
increases substantially
users convert to its
in its native Sweden,
premium service
where well over a third
of the population uses
the service.
Maroon 5. Photo by Mark Seliger.
Deezer too is
growing as a
global brand, and
is now available
in 182 countries,
supported by ISP
partnerships in
20 territories. It has
three million paying
subscribers worldwide.
Albert Slendebroek, general manager of Dutch indie dance label
Armada Music, says: “We’re monetising activity in territories where we
used to have no returns, and that is thanks to services such as Deezer
and Spotify that operate on a global basis and open in new countries
all the time.”
Aspiro’s service WiMP, already available in Denmark, Norway
and Sweden, launched in the Netherlands under the Ziggo Muziek
brand, in partnership with local ISP Ziggo. The service also went live
in Germany and Poland in 2012. rara.com is a subscription service
that is present in 33 countries, and installed on millions of HP and
Lenovo manufactured PCs and Android devices.
In addition to these services there are a wide range of local
subscription offerings. IFPI tracks more than 30 different subscription
services worldwide. In Europe, services include Germany’s JUKE and
Musicload, Ireland’s Eircom Music Hub, TDC from Denmark, Music Me
in France and the UK’s We7. In the US, MOG, Muve Music, Pandora
Premium, Rdio, Rhapsody and Slacker are attracting a growing user
base and in Asia, subscription is also a developing sector. Major
Korean services include Bugs, MelOn, Mnet, Olleh Music and Soribada.
Other regional players include KKBOX, MyMusic and PCCW Moov. In
Latin America, services including Rdio and Deezer expanded into the
continent in 2012.
Some subscription
IFPI tracks more
services have
than 30 subscription
partnered with ISPs
and mobile operators
services worldwide
to accelerate growth.
Such deals allow
telecoms companies to sell higher-value packages to their users,
reduce customer churn and associate their brands with music
while subscription services benefit from the marketing power,
billing relationship and user reach enjoyed by telecoms companies.
Examples of successful partnerships include Deezer’s deal with
Orange in France and Spotify’s tie-up with KPN in the Netherlands.
The access model is now a reality for millions of
people across the globe. This is a model that works;
it is no longer an experiment. We are here to stay.
Ken Parks, chief content officer, Spotify
Record companies are licensing subscription
services at different price points to appeal to a
variety of consumers. Services such as Muve Music
in the US and Samsung’s Official Top 40 Chart application
are examples of pricing models that have broken away from
the fixed monthly tariffs.
Subscription services are opening up new market opportunities.
Francis Keeling, global head of digital business, Universal Music Group
International, says: “New models of subscription – daily, weekly and
with different price points – could help expand the market. Many
consumers have expensive phones, but don’t want to spend £10 a
month on music. We need to think about the 18-year-old who has
just received a Galaxy smartphone for Christmas. We also need to
think about emerging markets such as Russia or Turkey.”
Physical stores are also backing digital services. Media Saturn,
Europe’s largest electronic and entertainment retailer, promotes
its subscription service JUKE in-store to traditional music buyers.
The service expanded from Austria, Belgium and Germany into Italy,
the Netherlands and Switzerland in 2012.
Investor confidence in music subscription is high. In November
2012 Spotify announced a US$ 100 million investment that valued
the company at US$ 3 billion, just one month after Deezer announced
a US$ 130 million investment from Access Industries.
We are focusing on building consumers’
engagement with music by investing in local
editorial in local language. We have people
on the ground choosing the best new music.
We care about the cultural relevance of our
service in any given country.
Axel Dauchez, CEO, Deezer
Many subscription services have opened up their platforms to thirdparty app developers. Classify, for example, enables classical music fans
to browse Spotify’s catalogue by composer, era, genre, instrument, style
and mood, as well as access playlists curated by music professionals.
Deezer integrated Songkick’s concert recommendation API, enabling
music fans to find local concert listings based on their listening habits.
15
Subscription transforming the industry’s
business model
Subscription services have played a key role in the revival
of some markets. Sweden is the best example, where per
capita on music spend leapt by 15 per cent between 2008
and 2012.
The subscription model has changed expectations for an
industry long used to a payment model based on payment
for songs sold. By contrast with downloads, subscription
services pay a royalty every time a song is played. Individual
transactions are made every time a song is played so are
typically smaller but continue over a longer period of time.
Robert LitsГ©n, COO of Swedish-based Cosmos Music
Group, says that subscription presents a different economic
model for record labels and artists: “With subscription, you
need to look across a longer timeframe to see a return on
investment. What’s really positive about the new digital
marketplace is that feedback is instant, but it also means
that you have to be really innovative about the kind of
campaigns you put together for each release.”
Label executives believe subscription services could change
the industry’s economic cycle. Per Sundin, managing director
of Universal Music Sweden, notes: “In the past, our releases
were stacked at the end of the year, with Christmas as the best
time to sell CDs. Today, our revenues increase each month and
have done for three years. With less focus on the Christmas
market, we can spread out the releases of albums at different
times, when artists have more of a chance to stand out and
campaigns and activities can run over years, not months.”
Monetising our video catalogue is a major area of
focus. Some advertising-supported video streaming
services are performing well and demonstrating
significant growth rates, improving revenues and
a more compelling customer experience.
Ole Obermann, executive vice president, digital partner
development, Sony Music Entertainment
16
Growth for music video
Music video has grown sharply in popularity over the last few
years, with services such as VEVO and YouTube attracting huge
global audiences.
YouTube remains the most popular video streaming service in
the world, with more than 800 million active users per month.
Nine in ten of the most watched videos in the service’s history
are music-related content. In November 2012, PSY’s Gangnam
Style overtook Justin Bieber’s Baby to become the most watched
YouTube video, with more than one billion views clocked up within
just five months of its release date.
VEVO is the most viewed channel on YouTube, with four billion
music videos streamed per month, and a music video platform
in its own right. Mobile is its fastest growing area, with 21 million
mobile and tablet apps downloaded to date. Having launched in
Australia, Brazil, France, Italy, New Zealand South Africa and Spain in
2012, the service is now live in 11 markets.
VEVO also invests in its own programming, improving and
broadening its content offer to appeal to the global TV advertising
market, valued at US$ 197 billion (PWC Global Entertainment &
Media Outlook).
Rio Caraeff, president and CEO of VEVO, says: “We’re continuing to invest
in distribution, opening in new markets from Australia to Brazil. We’re
building onto multiple devices and platforms from the Xbox and Roku
to cable television companies. We’re developing more original and
exclusive programming in addition to showcasing great music videos.”
The next-generation radio experience
Digital technology is helping deliver a next generation radio
experience. Internet radio services, such as Last.fm, Pandora,
iHeartRadio and Slacker create automatic, customised playlists
for listeners from a single reference point – an artist, genre,
decade or theme. The ability to skip to the next song adds to the
customisation, while many services also rely on professional curators.
Extremely popular in the US, these services are creating revenues that
did not previously exist and are expanding into additional markets.
In the US, a study of consumers by the NPD Group found that listening
to free online radio is most popular among young adults (18-25).
Europe: Licensing
helps digital consumers
Stephen Bryan of WMG, notes: “Half of music consumers prefer a leanback, radio style experience. There is a big opportunity to migrate
these consumers to digital radio services and make it very convenient
to discover new music and build a collection.”
This growing market has been driven by progressive licensing
on the part of major and independent record companies,
whose structures are geared to issuing licences to digital
services at different levels - national, European and global.
Pandora is the best-known internet radio
service in the US, with 66 million active
listeners and accounting for 8 per
cent of all radio listening, (up from
5.6 per cent a year ago) It is also
expanding internationally, opening
in Australia and New Zealand in
2012. Pandora’s growth illustrates
how recorded music is helping fuel
sales of the hardware and devices on
which it is played. Joe Kennedy, chief
executive and president, sees scope for
expansion away from the PC.
“We are penetrating areas where people
traditionally listen to radio, with 60 brands of
car supporting Pandora radio, but we are also
now accessing the living room with 650 home
consumer products now supporting Pandora.”
Individual services decide commercially when and where
to launch and grow. For various reasons they may choose
not to launch in every European country simultaneously.
For example, they need manage their capital, or they may
find some markets easier to break than others. They also
have to deal with varying levels of technology infrastructure,
credit card penetration and unfair competition from piracy.
Some services also pursue a partnership with local telecoms
companies to affordably reach a mass audience.
Slacker, an internet radio service available in
Canada and the US, offers three service tiers
to its 23 million registered users, or 4.5 million
monthly users, ranging from �Basic Radio’, a free
advertising-supported service to �Premium Radio’
a full on-demand service at US$ 9.99 a month.
With 60 per cent of new subscribers on the
“Premium Radio” tier the company says
its typical customer is male 25-34 year
olds, slightly older than the �average’
free online radio listener.
The digital music market in
Europe is expanding rapidly.
Start-ups such as Deezer, JUKE, Spotify,
and WiMP compete with established tech
giants such as Apple and Amazon. At least four major
digital music services, in addition to many smaller players,
are present in all EU member states.
Frank Taubert, chief executive of Germany-based subscription
service JUKE, says: “We have a pan-European licence from the
major record companies, but to succeed with a streaming
service, it is vital to have local knowledge. That is extremely
difficult for a streaming service to obtain unless it has the
right partnerships, local repertoire, local editorial, local
representation and people with local marketing expertise.”
Many services enable users to take their music with them
wherever they travel. Axel Dauchez, the chief executive
of Deezer, says: “If you are a Deezer user from France and
you travel to Bulgaria, you can still access your complete
collection. It is the same portability that people enjoyed
with their CD collection. It is their music and they should
have access to it from anywhere.”
We’re trying to capture an audience that has
always listened to music, but perhaps only
bought a couple of records a year and went
to a couple of concerts. We want to bring this
audience into the digital environment.
Jack Isquith, senior vice president, strategic
development, Slacker
17
The art of
digital marketing
One Direction mobilise an online army
Sonny Takhar, managing director of Syco Music, has seen the impact
of the social media phenomenon first-hand with the explosive
international popularity of the band One Direction. The band was
signed to his label after appearing in the 2010 series of the UK edition
of The X Factor. The band broke in the US with their debut album
Up All Night, which sold more than three million copies worldwide.
Their second album Take Me Home went straight to number one in
the charts in 35 countries in its first week of release, selling more than
four million copies.
The band has an engaged online fan base, with Syco estimating
that One Direction were responsible for around 21 million daily
digital interactions over the last year, from online searches to video
views. The band has more than 8.1 million followers on Twitter,
more than 40 times the number of UK Prime Minister David Cameron.
One Direction’s video for their single Live While We’re Young generated
8.3 million views in one day on VEVO in September 2012, setting a
record for the service.
Social media played a crucial role in the development of One
Direction’s career. Takhar attributes the success of the band to three
main factors. “First, we had a group with a point of difference and
a clear identity that reinvented the boy band for this generation of
teenagers. Second, we had a breakthrough track with What Makes You
Beautiful that was a seminal pop song. Third, we had a powerful route
to market that simply didn’t exist 10 years ago.”
Social media enables artists to have a powerful direct relationship
with fans, something that wasn’t possible to achieve with traditional
media simultaneously on an international scale. Using social media
is as important as the A&R process and traditional marketing efforts.
Yet artists still have to visit different markets and engage with fans to
build on their social networking success.
One Direction fans in the UK acted as effective ambassadors for the
band, promoting them on social networking platforms to other users
worldwide. Fans overseas then called their local radio stations, asking
that they play One Direction’s music. The impact of social media and
fan-driven support became apparent when the band visited the US
for the first time, to support the band Big Time Rush in a performance
at the Radio City Music Hall in New York. Police in Manhattan had to
close down a street because of the crush of One Direction fans.
Takhar says: “Historically, this sort of thing happened to popular bands
on their third or fourth visit to the US. This was One Direction’s first
time there and yet the fans knew every song and every lyric to every
song. They knew all the band members and who their favourites
were. Ten years ago it would have taken 12 months to get to that
level of engagement.”
18
Our fans are incredible and
so creative on social media –
they are our extended family
and our success around the
world is thanks to them!
One Direction
One Direction. Photo by John Urbano.
Social media is a powerful tool
for labels involved with electronic
dance music who want to reach a
global community of likeminded
consumers. Albert Slendebroek is
the general manager of Armada
Music, an Amsterdam-based
independent label that works with
artists including top 100 DJs by
such as Armin van Buuren (named
by DJ Mag as the current number1
DJ), Paul Oakenfold and Dash Berlin.
Armin van Buuren. Photo by Chris Davison.
Dance label harnesses
social media
These DJs are building their audiences through social networks,
allowing them to keep their global fan-base updated on new
releases, gigs, videos and playlists. By understanding when fans
are online and where they are based, Slendebroek says Armada
can maximise the impact of their communication to fans.
Social media has become such a key part of the marketing effort that
Armada Music employs a large team of social media experts from
which a few spend part of their day working solely
on Twitter. “Our DJs are attracting a lot of activity
Fans sign up to social networks like Twitter
on Twitter. It enables us and the fans to have
to follow their favourite DJs, share their
two-way communication and helps us build
playlists and give their opinions. It’s great
a community of people worldwide that love
that we can hear directly from our fans about
our music.”
what they like and want us to do more of.
Armin van Buuren
These efforts are generating results. Armin van
Buuren, for example, has accumulated 800,000
followers on Twitter – a significant number for a
dance artist. He also has a weekly radio show that airs in
51 countries and has up to 20 million listeners.
19
A personal video for every fan: Linkin Park
Linkin Park’s ground-breaking sound on their multi-platinum
debut album Hybrid Theory established them as an internationally
renowned band with an extensive global fan base in 2000.
Their pioneering use of the internet enabled them to engage
a tight online community in an age before Facebook and
Twitter made direct artist-to-fan relationships the norm.
Over the last 12 years the band has retained a close relationship
with its core fan base through the website Linkin Park Underground.
For their 2012 album, Living Things, Warner Bros. Records saw an
opportunity to create an innovative online campaign to connect
the band with an even broader audience.
A series of online innovations gave the band’s core fans the
means to create a viral buzz around the record that grew
organically before being picked up by the media.
“Everything we did had a highly social element” says J Scavo,
SVP interactive marketing and e-commerce, Warner Bros. Records.
“Linkin Park has wide appeal and a large fan base that loves to hear
their music on the radio and stream their tracks, but which is not
directly connected to the band on the web. We super-served the
core fans first, the folks who will evangelise about the record,
to create a gigantic halo effect.”
As well as creating music, a big part of being a
musician is getting the art out there and Linkin
Park is exemplary in that regard.
An interactive video for Lost In The Echo was the centrepiece of the
campaign. Through a microsite, fans would see photos from their
Facebook newsfeed depicted in the interactive video, which was
set in a post-apocalyptic world where most photographs have been
destroyed. The app drew in the metadata from the photos, selecting
those relevant to the story in the video: photos passed between the
actors elicit extreme reactions, such as reverence or love, depending
on the context of the photo.
“Making a video that drew in fans’ photos, looking at the context
around them to create a really personalised experience was a first.”
says Scavo. “It made the standard video more meaningful, a personal
lens on the video and the song.”
The holistic campaign was a huge success, with four times as
many people visiting the band’s site on the day of release than
had visited it on any day in the decade before. The interactive
video, described by the band as “special effects on the fly”, was
the first of its kind and this, combined with the band’s relationship
with its fans, turned it into a viral sensation.
“The band was the number one driver of creativity, both in their art
and how they want to connect with their fans. As well as creating
music, a big part of being a musician is getting the art out there
and Linkin Park is exemplary in that regard. Reaching out personally
really made the difference. The innovative online events that
complemented the incredible music caused people to tune
back in. Those actions have an explosive viral effect in a socially
connected ecosystem.”
J Scavo, SVP interactive marketing and e-commerce,
Warner Bros. Records
Linkin Park. Photo by James Minchin.
20
Taking classical digital
Record companies are working to engage classical music fans with
digital channels, developing offerings that meet their needs, while
also seizing the opportunity to widen the audience they reach.
Decca Classics is headed by managing director Paul Moseley, who
looks after an international roster that includes Daniel Barenboim,
Cecilia Bartoli and Mitsuko Uchida. Moseley says 2012 was a “tipping
point” for the label’s digital development, with a fifth of its revenues
now deriving from digital channels. He believes the development
of a new generation of apps, platforms and services offers an
opportunity to improve the digital engagement of classical fans.
The Decca team harnessed a variety of digital platforms to promote
Cecilia Bartoli’s recent album Mission. Decca’s interactive marketing
campaign sought to increase direct engagement with music fans ahead
of the album’s launch: via a series of online episodes fans were invited to
guess which composer’s work she would be performing. When it was
revealed to be 17th century Italian composer Agostino Steffani, Decca
released an app that enabled users to find out more about him.
The launch of Sinfini Music in November 2012 is a further example of
an innovative digital approach to classical music. Sinfini is a Universalowned platform run by a team of specialist music journalists and
marketers. The service is editorially independent and aims to help
users who think they may like classical music, but are not sure where
to start. Targeting a younger demographic, Sinfini Music provides
editorial, streaming playlists, videos and podcasts, to help people
discover classical music as well as the ability to purchase recordings
and concert tickets.
Decca is also working with technology partners to develop the high
definition digital sound experience and to improve the quality of
audio files offered to classical music fans.
Moseley also believes that digital channels offer the opportunity for
classical labels to reach a wider audience. “We’ve been working on
a programme called Beethoven For All with Daniel Barenboim, which
aims to take the composer’s music to a new worldwide audience.
We’ve worked with iTunes to deliver high-quality audio tracks and
ran a global promotional campaign with them.”
Cecilia Bartoli. Photo by Uli Weber.
We exist to build artists,
take them to superstar
level, get their recordings
to cut through in a
crowded marketplace
and develop a long-term
relationship with them.
Paul Moseley, managing
director, Decca Classics
The challenge for labels is often to ensure that they can monetise
the digital success of their performers. “We signed Valentina Lisitsa,
dubbed the �YouTube Pianist’, whose videos have been watched
more than 50 million times. We want to help her achieve commercial
success and are working with her on a digital-only version of
Rachmaninov’s second piano concerto.”
Moseley concludes that while marketing and distribution channels
may be changing, A&R is still at the heart of what his label does.
“We exist to build artists, take them to superstar level, get their
recordings to cut through in a crowded marketplace and develop
a long-term relationship with them.”
21
Music is an engine of
the digital world
Recorded music adds value to a broad range of businesses,
including digital and social media platforms, device manufacturers
search engines, retailers and entertainment venues, broadcasters,
merchandisers and concert promoters. All these businesses benefit
from the continuous investment record companies make in
discovering, nurturing and promoting artistic talent. IFPI figures
show the industry annually invests 26 per cent of its revenues –
US$ 4.5 billion – in such activity.
Fuelling digital engagement
Artists fuel huge levels of engagement across digital and social media.
Research shows that 67 per cent of social network users
in 20 countries discuss music and movies, ahead of community
issues (46%), sports (43%) and politics (34%) as topics of conversation.
Social networks have developed vast user bases, with 66 per cent of
global internet users accessing them (Pew Research Center).
Businesses target these large audiences, setting up channels, feeds
and profiles to engage with customers. Music is a huge asset for
them. A UK study found consumers consider music brands to be the
most appealing on such services, with 65 per cent of respondents
describing artist and festival pages on Facebook as “appealing
or very appealing”, a figure which rises to 71 per cent on Twitter
(Wiggin 2012 Digital Entertainment Survey).
New research highlights the impact individual artists have on digital
and social media. Research firm New Big Sound studied five leading
artists – Bruno Mars, Justin Bieber, Katy Perry, One Direction and PSY.
The results, shown on this page, reveal those artists alone drive more
than 170 million digital interactions a week.
It’s hard to describe the relationship I have with my
fans because of social media. But social media has
given me the most open and honest relationship
possible with my fans. When I speak to them it’s
direct and when they speak back to me it’s the same
thing. It’s the most real interaction possible.
Weekly digital interactions driven by five leading artists
digital interaction
global digital
interactions (M)
YouTube views
VEVO views
Wikipedia page lookups
110
59
2
Facebook �likes’
1.5
New Twitter Followers
0.9
Source: Next Big Sound. Based on analysis of Bruno Mars, Justin Bieber, Katy Perry, One Direction and PSY.
Week of 3rd December 2012.
Artists dominate individual digital and social platforms and fuel
their traffic. Seven of the ten most followed people on Twitter are
artists, with Lady Gaga and Justin Bieber in first and second place.
On Facebook, nine in ten of the most �liked’ people on the social
network are musicians, with Rihanna alone attracting more than
62 million “likes”. On YouTube, nine in ten of the most watched
videos are music related.
9 in 10 of the most liked
people on Facebook are artists
Music creates personal connections and there’s
huge value in that. If you look across all Google
searches, Facebook likes, Twitter follows, YouTube
views and so on, how many involve music? It’s a
currency that connects people.
Troy Carter, Lady Gaga’s manager
Justin Bieber
Rihanna. Photo by Universal Music.
Justin Bieber. Photo by Ben Watts.
22
Fuelling hardware adoption
Listening to music on the move is a core activity for users of
smartphones and tablet computers. Consumers see music as central
to the mobile experience. According to Ipsos MediaCT consumer
research, smartphones are now the third most popular device for
music listening, behind only the computer/laptop and hi-fi/music
systems, but already ahead of portable music players, such as
MP3 players. Subscription service Deezer reports that 60 per cent
of its new subscriptions are generated using mobile phones, while
mobile users account for 81 per cent of Pandora’s total user base.
Tablet owners also use their devices heavily to listen to music,
with a US study for the Online Publishers Association in June 2012
finding 51 per cent used them to listen to music, compared with
42 per cent who used them to read books.
Driving the live entertainment industry
Performance rights income now accounts for 6 per cent of industry
revenue. The industry continues to work globally to ensure that
broadcast and performance rights are fully in place and royalty rates
set are fair. The live music industry continues to benefit from years
of investment in artists by record companies. The top three grossing
live acts of 2012 were Madonna, Bruce Springsteen and the E Street
Band and Pink Floyd’s Roger Waters, all artists with a significant back
catalogue of recordings (Billboard).
Top 10 most followed accounts on Twitter
NAME
FOLLOWERS (M) PROFESSION
1
JUSTIN BIEBER
34.6M
ARTIST
2
LADY GAGA
34.2 M
ARTIST
3
KATY PERRY
32.5M
ARTIST
4
RIHANNA
28.3 M
ARTIST
5
PRESIDENT OBAMA
27.3M
POLITICIAN
6
TAYLOR SWIFT
24.1M
ARTIST
7
BRITNEY SPEARS
23.9M
ARTIST
8
SHAKIRA
19.8M
ARTIST
9
KIM KARDASHIAN
17.4M
MODEL
10
ELLEN DEGENERES
16.9M
TV PRESENTER
Music is the most searched-for art form on the
internet, and that doesn’t happen by accident.
It’s driven by investment in new music.
Max Hole, chairman and CEO,
Universal Music Group International
Attracting customers, driving profits
Music is used in a vast range of commercial contexts,
from bars, shops and nightclubs, to radio and television broadcasts.
Research conducted in the UK by VisionCritical in April 2012
found that 65 per cent of small and medium sized business
owners found music in the workplace made their employees
more productive while 40 per cent believed it could increase
sales or financial results.
Despite this growth, some very significant markets still unfairly
deny artists and producers broadcast and public performance rights.
In the US, the corporate radio industry still enjoys music for free
while performers earn no royalties. For the music industry, this is
an unacceptable situation.
Music is the media that is most fun to
consume on the new generation of digital
devices. What is a smartphone without music?
You take away half the fun.
Edgar Berger, president and CEO international,
Sony Music Entertainment
Katy Perry. Photo by Lauren Dukoff.
Source: Twitter Counter. 18th February 2013
7 of the top 10 most followed
people on Twitter are artists
23
Going global: the promise
of emerging markets
At the start of 2011, the major international services were present in 23 markets.
Today, they are present in more than 100. With smartphone and tablet use increasing
in emerging economies, consumers can access music services even where traditional
technology and e-commerce infrastructure is not strong.
Markets such as Brazil, India and South Korea are starting to tap their vast potential.
Edgar Berger, president and CEO, international, Sony Music Entertainment, says:
“The recovery of the music markets means we can invest more in artists and repertoire.
In some countries we’ve doubled A&R spend in the last four years as the market has
recovered. Everyone wants to grab a share of a growing market.”
Some key developing markets, however, are blighted by poor copyright conditions.
Russia, notably, could be a world top 10 market if it can create an effective environment
for copyright enforcement.
Brazil: A market set to surge
A huge population, growing economy, expanding middle-class,
increasing device penetration and social media use are all driving
digital music in Brazil. The total recorded music market grew by 11.2
per cent in the first half of 2012 and by 8.6 per cent in 2011.
Digital sales took off in 2012, following the launch of iTunes at the end
of 2011, with revenues expected to have nearly doubled in the past 12
months. Performance rights income has also grown, with Brazil seeing an
increase of 29.6 per cent in 2012, the highest rate in the past eight years.
VEVO too has proven successful, launching a local site and
achieving more than 100,000 app downloads in the first few weeks.
The company has also invested in a local advertising sales team to
expand its partnerships with local and international brands.
Defying a global trend, ringback tones sales grew in 2012 with major
mobile operators backing the format. The format benefits from
being piracy-proof and is offered on a subscription basis, bundled
with the operator’s billing system. Herb Payan, senior vice president,
digital content development, Sony Music Entertainment, adds:
“Differentiation of business models is a challenge but also a key
component of our digital strategy in Brazil. With the introduction of
new services to the market it is becoming cool to use legal services.”
Alejandro Duque, vice president, business
development and digital, Latin America, Universal
Music Group, says Brazil is seen by many as the gateway
24
At the start of 2011,
the major international
services were present
in 23 markets. Today,
they are present in
more than 100
The launch of iTunes showed that Brazilians are prepared
to pay for music. We thought consumers were so used
to piracy that they would never buy music again. But this
has been proved wrong. Moreover, a new generation of
consumers can now have their first music experiences
in the legal environment.
Marcelo Soares, president, Som Livre
to the Latin American region, and expects many other digital media
business to launch in Brazil in 2013: “We are seeing a significant rise in
sales of smartphones and growing internet access in Brazil and once
consumers have the hardware, they need the media.”
Brazil has many of the elements in place to support a strongly
growing digital music market; a strong label scene, a developing
retail sector; and an improving technology infrastructure. If the
government did more to protect intellectual property rights online
this would strengthen the foundations required for future growth.
There was encouraging news in 2012 when copyright holders were
able to persuade the government to include notice and takedown
procedures in its “net neutrality” bill.
Russia: Hurdles to growth can be overcome
rUSsia world rankings
GDP
Russia has many of the ingredients to have a successful music business.
It has an outstanding musical heritage and contemporary artists with
global appeal, such as the rapper Timati who has topped the charts
across Europe, and classical pianist Denis Matsuev. It also has the
largest online population in Europe, albeit with relatively low credit
card penetration and online spending.
NUMBER OF INTERNET USERS
10th
RECORDED MUSIC MARKET
23rd
Source: CIA World Factbook, IFPI
Given these factors, Russia should be one of the recording industry’s top
10 markets. At the moment, however, Russia is the 23rd largest market,
below Poland in terms of size, failing to maximise its enormous potential.
This is despite the investment in domestic talent by labels such as Gala,
founded in 1988 and one of Russia’s largest record companies.
Russia has 12 licensed services,
including iTunes, accounting
for more than a quarter of
industry revenues
Russia has a nascent digital music business. There are 12 licensed services,
accounting for more than a quarter of overall music sales revenues, with
iTunes opening in December 2012. But these services face an enormous
hurdle to becoming successful and sustainable, given the competition
from unlicensed services that circumvent all the normal costs of
operating a licensed business.
The most significant unlicensed service is vKontakte,
Russia’s leading social network. vKontakte has built its
user base with the help of an unlicensed music service:
hosting and providing access to tracks; highlighting
their availability by publishing charts of the most
popular songs; and making it easy for users to locate
and listen to them.
7th
The industry has called for government to support its music sector,
by ensuring Russian law makes it clear that services such as vKontakte
are obliged to take reasonable steps to prevent copyright infringement
and that it is illegal for such services to induce or knowingly facilitate
infringement. If the right balance is struck, IFPI believes the digital music
marketplace can grow exponentially, but the key is to ensure there are
incentives for reasonable conduct that will expand legitimate commerce
rather than mass copyright infringement.
The Russian government can also help in addressing some of the
issues rights holders face when bringing infringement cases before
the courts. Streamlining the requirements for the provision of evidence
would make it more cost-efficient for rights holders to bring cases.
If effective injunctions were available to stop unlicensed businesses
trading, this could stop them continuing to generate revenues even
after their activities have been judged illegal in court. In addition,
making provision for the personal liability of directors of infringing
companies would stop individuals acting as serial infringers by
setting up a succession of unlicensed services.
Denis Matsuev. Photo by Sony Music Russia.
Despite the company’s attempt to evade responsibility,
by saying the tracks are uploaded by its members,
pressure is mounting on vKontakte to address the
problem. Entertainment companies are urging the
business to take steps to bring its business practices
in line with other social networking sites such as
Facebook. In November 2012, a case brought by Gala
Records ended in a landmark court ruling, confirming
that vKontakte is guilty of distributing unlicensed
music. The ruling concluded the case, following a
number of earlier judgments in lower courts, and
paved the way for further actions by rights holders.
25
India: Nearing an all-time high
The Indian recorded music market grew for the third consecutive
year in 2012, with digital sales overtaking physical sales.
Digital growth in India has been predominantly through mobile
channels. Streaming services too are beginning to take off with
young consumers and an expanding middle-class driving digital
consumption. With 2012 revenues approaching an all-time high, some
within the business believe India could become a top 10 global market.
The Indian music scene has traditionally been driven
by Bollywood, but changing demographics, massive
internet exposure to global music trends and a
progressive youth culture are leading to evolving
tastes and this growing market is set to be much
more diverse in the future.
Mandar Thakur, chief operating officer, Times Music
India’s mobile phone market grew hugely
in 2006 and has since gained more than
half a billion subscribers, taking the total
today to 900 million. Music plays a key role in mobile operators’
customer acquisition, branding and engagement strategies, as
smartphone adoption rises. Leading operators such as Airtel,
Vodafone, Idea and Tata Docomo offer a range of music services
including ringtones, ringback tones, downloads and mobile radio
streaming services – which are usually bundled into subscription
packages. Mobile radio services are evolving to offer multi-language
stations and intelligent playlists.
The concept of daily subscription for all kinds of
music products on mobile is well instilled in India.
Shridhar Subramaniam, president, Sony Music India
and Middle East
Streaming services such as Gaana,
Dhingana and Saavn and download stores
are beginning to emerge. Unlike music offerings
from mobile operators, independent services face some
key challenges, such as establishing a billing relationship
with customers in a country where only 1 per cent of the
population has a credit card (Reserve Bank of India).
India’s emerging music business is still struggling to compete
with piracy. IFPI estimates that more than half of internet users (54%)
access unlicensed services on a monthly basis in India – a huge
market potential, if some of them can be migrated to licensed services.
26
We have been working hard to license a range
of services that meet the needs of consumers.
India now has a diverse market, download
stores, streaming services and bundled offers.
Devraj Sanyal, managing director of Universal Music India
The Indian courts have started to act
to support legitimate digital and creative
industries. In February 2012, the Calcutta
High Court issued an injunction ordering 11
ISPs to block access to the infringing website songs.pk. A further
judgment in March 2012 ordered 387 ISPs to block access to
104 infringing websites. IFPI estimates that with this single action,
nearly 10 million internet users stopped accessing these sites. In
February 2013, the courts ordered all these ISPs to block a further
162 websites. However, more action is needed to tackle other
unlicensed sites to enable emerging licensed services to grow.
The physical market in India is dominated by local repertoire with
Bollywood soundtracks hugely popular. Domestic repertoire accounts
for an even greater share of digital sales. This is a vibrant market with
more than 500 music labels releasing music in over 20 languages.
India’s music tastes are changing and with consumers increasingly
open to modern interpretations of the traditional Bollywood sound
and many labels have started to invest in this area.
As the market improves, and a growing
middle-class starts to embrace
its own popular culture,
many suggest India
could become the
second-largest
market in Asia.
Strong market potential in The Netherlands
The Netherlands is a top 10 recorded music market, but digital
revenues are still underperforming their potential, representing an
estimated 27 per cent of recording industry income in 2012. Piracy
levels were historically high, fuelled partly by the government’s
reluctance to declare that downloading from an illegal source was
itself illegal. Yet things are changing as steps have been taken to
tackle online piracy and as licensed services expand their activities.
The Netherlands has the potential to see the sort of market
turnaround that Sweden has enjoyed in recent years.
If you had told me five years ago that two of the
biggest telecoms companies in the Netherlands
would be running major campaigns promoting
music services, I would have said you were dreaming.
Today, it is a reality and other telecoms companies
are eager to launch their own music offerings.
Kees van der Hoeven, president,
Universal Music Netherlands
Boosted by subscription services, the Dutch
A series of successes against piracy have helped the legitimate
market is estimated to have had the biggest
market develop in the Netherlands. One came in January 2012,
digital growth among the major European markets in
when Megaupload was closed down by the US authorities.
2012 (+66%). Ken Parks, chief content officer, Spotify, is optimistic:
This led to many other leading cyberlocker sites, such as
“Partnering with telecoms companies has proved an effective route to
Filesonic and Fileserve, disabling sharing facilities or shutting down.
market for us. Our first success was with Telia in
Soon after, access to The Pirate Bay, then the
Scandinavia. The KPN deal is helping us penetrate
biggest unlicensed service in the Netherlands,
the Netherlands in a really amazing way.”
was blocked by two ISPs following a court case,
The Dutch digital
Despite this advance in the digital sector, total
with the others following in May 2012. The
music
market
saw
sales
are expected to have declined in 2012 due
effect of both events in the Netherlands was
to
heavy
falls in physical format sales. As the
the biggest growth
noticeable. According to IFPI figures, around
digital
share
of the market grows, The Netherlands
6.6 million Dutch internet users were using
in Western Europe
may
soon
bounce
back to growth.
unlicensed services in January 2012; this fell by
at
66
per
cent
4 per cent to 6.1 million by December 2012.
The industry has called for government to take
further action against unlicensed services, since
At the same time, many Dutch consumers have
licensed
services will struggle to compete in the
engaged with licensed services, encouraged by
long-term.
Actions
such
as
expediting the legal process required to
innovations such as Spotify’s partnership with major telecom company
block
access
to
mass
copyright
infringing websites, and changing the
KPN and T-Mobile’s partnership with Deezer – both of which were
law
to
make
it
unlawful
to
download
or stream from an illegal source,
heavily marketed.
would significantly improve market conditions.
Rick van Schooten, managing director, Sony Music Entertainment
Kees van der Hoeven, president of Universal Music Netherlands,
Benelux, says: “It seems the Dutch consumer is starting to follow
believes that such an improved environment would help Dutch
the Swedes and switching to streaming services in a big way.
record companies invest in local talent. “As an industry, we have
We’ve seen this sector explode in the last year.”
continued to undertake A&R work in the Netherlands, with up to
60 per cent of our top 10 best sellers being Dutch performers.
2012 online use of Spotify v the Pirate Bay in the Netherlands
If revenues can return to growth then it means we can sign
even more great local artists.”
The Pirate Bay
Spotify
3.0
million
users
000 users
2.5
We have protected our A&R budget in recent years,
continuing to sign local artists such as Aliyah Kolf,
but we would be able to increase our investment
in the next generation of Dutch talent if the market
begins to grow again.
2.0
1.5
1.0
Rick van Schooten, managing director,
Sony Music Entertainment Benelux
0.5
0
Dec 2011
Jun 2012
Dec 2012
Source: ComScore
27
Engaging with
online intermediaries
The predominant focus of this report is on what the music industry
is doing to help itself develop a thriving business in the digital
world. However, investing in talent, innovating with technology and
licensing repertoire are not alone sufficient to ensure the industry’s
future success. Copyright protection and enforcement help underpin
the industry’s business. As an illustration of the continued serious
impact of internet piracy, IFPI estimates, based on data from both
Nielsen and ComScore, that as many as a third of all internet users
(32%) still regularly access unlicensed sites.
The top priority in securing a fair legal environment is to have the
effective cooperation of “intermediaries” – companies and industries
such as advertisers, internet service providers, search engines and
payment providers whose activities have a decisive influence in
shaping a legitimate digital music business.
Even users of pirate services want action on piracy
WHAT CONSUMERS THINK
ALL INTERNET
USERS
PIRATE
USERS
Search engines should give priority to legal
digital music services over pirate services
when they show their search results
60%
59%
Accessing music through services that
don’t have the copyright owner’s
permission is unfair to those creating
and producing the content
59%
58%
Companies should not advertise on
websites that offer music without the
copyright owner’s permission
55%
56%
I don’t know where to find legal music
online, so I use other services instead
24%
31%
Source: Ipsos MediaCT
Advertising: Tackling a major source of funding
for music piracy
Advertising is a major source of funding for unlicensed music services
worldwide. Brand owners typically want to avoid the reputational
damage that can be caused when their advertisements are placed
on websites that engage in or facilitate unlawful activity. They also
want to be sure their advertising budget is not providing financial
support to unlicensed websites. Many companies are unaware or
not directly in control of where advertising is placed, and there may
be several intermediaries between them and the websites on which
their ads appear.
Rights holders are working with advertisers and intermediaries –
media agencies and advertising networks - to help them address
this problem. Efforts centre on advertisers and intermediaries
promptly removing adverts when notified and implementing
proactive measures to stop adverts on rogue sites in the first place.
28
IFPI regularly sends notices to companies found to be advertising
on copyright-infringing sites. Respondents are generally unaware
that their advertising has appeared on unlicensed sites due to
the complex communication lines between the brand owner
who ultimately pays for the ad, and the website on which the ad
appears. The system is clearly limited in its effectiveness. While many
companies say they will take steps to remove their ads from a specific
site, often ads reappear on the same or similar sites and it is clear that
reactive steps are not sufficient to solve the problem. Clearer industry
agreements and codes of practice are needed to ensure that all those
in the online advertising supply chain take their share of responsibility
for where ads are ultimately placed.
Is it acceptable to tolerate advertising revenues
being gobbled up by a service provider who
fosters the free sharing of illegal music files?
Michel Barnier, EU Commissioner for internal market
and services, Midem 2013
In May 2012, the leading advertising industry
trade bodies in the US published a statement of
best practice that encourages brand owners and media
agencies to contractually require all businesses in the supply
chain to take steps to prevent ads appearing on infringing sites,
and quickly remove any placed in error. In the UK, Internet Advertising
Sales Houses operates a code of conduct prohibiting its member ad
networks from placing adverts on infringing sites while Digital Trading
Standards Group is a new initiative from industry measurement body
ABC developing best practice guidelines within the industry.
Many individual advertisers are also pulling their presence from
pirate websites. In January 2013, Levi’s announced it was pulling
its advertising from unlicensed services following a report from
the University of Southern California’s Annenberg Innovation
Lab which highlighted the role advertising was playing in funding
online piracy. In 2012, Canada’s Department of Finance quickly pulled
adverts for its Economic Action Plan from The Pirate Bay, after the
Ottawa Citizen revealed they had been placed there, blaming the
networks that placed its advertising.
Search engines – a vital role to play
Search engines are the first port of call for many internet users looking
for music online, and more than half of those accessing unlicensed
services in the UK (51%) found those services through a search engine
(Harris Interactive, Jan 2012). With no search engines taking effective
steps to direct users to licensed services, consumers are often
directed towards the illegal operators.
The solution promoted by the music industry is for search providers to
help direct their customers to licensed services. This would be a socially
responsible measure that is demonstrably feasible technically and has
widespread support. Consumer research by Ipsos MediaCT across nine
countries, found that an average of six in 10 internet users (60%) believe
that search engines “should give priority to legal digital music services
over pirate services when they show their search results”.
In August 2012, Google announced it was altering its algorithm to
take into account the number of infringement notices it had received
from rights holders about specific sites. This was in order to “help
users find legitimate, quality sources of content more easily.” That is a
welcome step in principle, but unfortunately has not seen any impact.
Paul McGuinness, manager of U2, believes more commitment is
needed: “It seems incomprehensible that a company with as much
corporate genius as Google can appear so clunky when it comes
to doing something about piracy.”
A search for the name of any artist followed by the term “mp3”
still returns a vast number of illegal links on the first page of results.
The industry continues to urge Google to implement the policy
effectively, while encouraging other search providers to enact
meaningful policies.
More than half of those accessing
unlicensed services in the UK found
them through a search engine
Further ISP cooperation needed
Internet service providers (ISPs) have direct relationships with internet
users and can have a profound influence in encouraging and educating
their customers to use the internet legally and responsibly. ISPs have
been asked to block users’ access to illegal websites and to engage them
in educational programmes, such as sending notices when they are
identified as infringing, informing them about licensed music services
and warning of possible legal consequences if they continue to infringe.
Where it has not been possible to achieve this voluntarily, the industry has
sought legislation or pursued court action to establish legal precedents.
Website blocking has proved to be an effective way of curbing the
use of individual illegal services. ISPs have been ordered to block
users’ access to copyright infringing sites in a total of 12 countries. In
Asia, governments or courts in India, Malaysia and South Korea have
ordered infringing websites to be blocked. In Europe, courts in Austria,
Following steps taken by Google, the recording industry has been
Belgium, Denmark, Finland, Greece, Italy, the
able to submit more requests to remove
Netherlands and the UK have ordered
links to infringing content. However,
ISPs to block users’ access to infringing
the number of requests that Google
It seems incomprehensible that a company with
services such as The Pirate Bay.
accepts through its interface is still
as much corporate genius as Google can appear
Blocking orders have a significant
impact on usage of illegal websites.
In five European countries where
The industry believes search engines
Paul McGuinness, manager, U2
blocks
were imposed on The Pirate Bay
could also do more to ensure that
(Netherlands,
Belgium, Finland, Italy and
they do not generate advertising income
UK),
usage
levels
fell
69 per cent during the
for illegal sites through the use of their online tools, or inadvertently
full
year
(ComScore/Nielsen).
By contrast, in
derive financial benefit from advertising placed by illegal sites.
countries
without
the
block,
traffic
rose by 45
Rights holders remain engaged in discussions with search engines
per
cent.
There
was
also
a
wider
correlation
with
across all of these areas in an attempt to persuade them to be socially
levels
of
BitTorrent
piracy.
The
five
countries
with
the
block
saw
a
7
per
responsible actors in the digital economy. This is a top priority for
cent
increase
in
BitTorrent
use
in
2012,
compared
with
an
increase
of
22
music companies in 2013.
per cent for countries without the block.
only a fraction of the huge volume of
infringing links available.
so clunky when it comes to doing something
about piracy.
Infringing links dominate search results
Google
yahoo
Website blocking works
Pirate Bay users in
countires without the block
bing
macklemore
100%
70%
70%
bruno mars
90%
70%
70%
the lumineers
70%
60%
60%
taylor swift
80%
80%
80%
will.i.am
90%
80%
80%
million users
artist
Infringing links on the first page of
search results by artist name and“MP3”
25.0
20.0
15.0
10.0
5.0
0.0
Dec 2011
Pirate Bay users in
countries with the block
Dec 2012
Source: IFPI
Source: IFPI. Top five artists in the Billboard Top 100, 1st February 2013
29
Further ISP cooperation needed
Despite these positive effects, litigation to block websites can be a
cumbersome and expensive process, and more needs to be done
to enable rights holders to expedite the process so that swifter action
on multiple sites can be taken, while still ensuring due process for
the affected sites. Research from Ipsos MediaCT found that even
43 per cent of those that use pirate sites think access to them should
be blocked or they should be shut down so that people cannot
access them.
In several countries, ISPs have notification programmes aimed at
migrating their customers to licensed services. The schemes involve
ISPs notifying the account holder that their connection is being
used illegally, with deterrent consequences such as fines to follow
if warnings are repeatedly ignored.
These programmes have been effective where they have been
introduced. In France, use of peer-to-peer (P2P) services fell by
17 per cent after notices started being sent to internet users in
October 2010 under the auspices of the government body Hadopi.
Hadopi has now sent more than one million notices, with only
8 per cent of infringers receiving a second warning. P2P use in
New Zealand fell by 16 per cent after the introduction of a similar
notice sending programme.
South Korea also shows positive evidence of the impact of active
steps by intermediaries. A government body is responsible for
sending notices to service providers, primarily cyberlocker operators,
when their users infringe. The cyberlocker operators then inform
their users of their illegal activity. Cyberlocker providers also now
need to register with the government following the passing of recent
legislation. The programme has been effective in reducing infringing
cyberlocker activity in South Korea, with the number of users in the
country falling by 22 per cent in the past year.
The enforcement programme has, over a period of years, helped the
licensed digital marketplace in South Korea significantly. The country’s
music market grew by 65 per cent between 2007, when the measures
were introduced, and 2011, while Korean repertoire has exploded in
the region and abroad. The country has advanced from being 23rd
largest market in the world in 2007 to the 11th in 2012.
In the US, the formation of the Center for Copyright Information
(CCI), backed by a coalition of rights holders and five leading ISPs,
led to the implementation of a similar programme on a voluntary
basis. The CCI says that the programme is intended to be primarily
educational, with “mitigation measures”, such as a compulsory
copyright tutorial or the slowing of broadband
connections, applying after repeated messages
to users. It will also undertake a range of education
initiatives. The programme is expected to be
implemented in early 2013.
30
Payment providers step up action on illegal sites
The recording industry continues to work with payment
providers, such as MasterCard, Visa and PayPal, to ensure
their payment services are not being used by unlicensed
services. IFPI estimates that the programme has prevented
US$ 530 million of illegal trade since launch in 2011,
based on the revenues the each service generated before
payment services were removed.
In the UK, IFPI, the City of London Police and a growing
number of payment providers have been cooperating
since March 2011 in a process that has prevented 52
illegal websites, based in Russia and Ukraine, from abusing
payment services. The programme is thought to have
been a major deterrent, since operators understand
that they will not find it easy to secure services from
internationally recognised payment providers. Providers,
such as American Express and PayPal, which have direct
relationships with merchants, now proactively remove
their services from infringing websites without waiting
for notification. Cooperation is now extending to tackling
unlicensed cyberlockers.
We need to challenge the notion that piracy
hurts no one and explain to consumers that
there are plenty of ways to get content legally.
Jill Lesser, executive director, Center for Copyright
Information (US)
Tackling illegal
online businesses
Disrupting pirate services is an essential part of the music industry’s
campaign to support legitimate digital businesses. In 2012, legal
actions led to the closure of a number of high-profile sites and
services – including leading cyberlocker service Megaupload
and popular BitTorrent sites Demonoid and BTJunkie.
US$ 175 million – FBI
estimate on the revenue
generated by Megaupload
Disrupting unlicensed cyberlockers
Cyberlockers, which enable users to upload, store and share files
in a dedicated hosting space can act as massive file-sharing services.
They make money from advertising and from selling premium
accounts that enable users to download files faster. The most heavily
used lockers for music include 4shared, zippyshare and Turbobit.
Closure of Megaupload – the ripple effect on cyberlocker piracy
140,000
000 users online
135,000
130,000
125,000
120,000
115,000
110,000
2
201
Dec
2
201
Jun
Dec
201
1
105,000
Source: IFPI
Megaupload was one of the biggest brand names in unlicensed
content file hosting before it was shut down by the FBI in January
2012. The FBI estimates the business generated US$ 175 million in
revenues and estimated the damage to the creative industries in
the region of US$ 500 million. The operators of Megaupload now
face criminal charges. The site’s closure had a ripple effect through
the sector with services such Hulkshare and Mediafire quickly
changing their operations to implement filtering, or dropping rewards
programmes designed to encourage users to upload large amounts
of material. The use of these services fell sharply throughout 2012.
Reducing pre-release leaks
A key part of IFPI’s role is to reduce the risk of music leaking online
before it is released. Pre-release leaks hit an album or single at
the most vulnerable point in their sales cycle, undermining labels’
marketing and promotion efforts.
Record labels have improved how pre-release material is
distributed internally during the build up to release while
measures such as copy-protection, watermarking, alert systems
to detect phishing emails and security guides for staff have all
reduced leaks. Serious pre-release leaks are now less frequent
as a consequence of these measures.
Hacking remains a problem for music companies, however.
The industry won a major case in 2012 after hackers obtained
and distributed pre-release content. IFPI investigators identified
the source of the illegally distributed music and took their
evidence to the FBI and German police. A criminal investigation
led to the arrest, prosecution and sentencing of five people and
the disruption of the group has had a noticeable impact on global
pre-release piracy.
IFPI also works to ensure links to illegally hosted content are quickly
removed, even after it has been officially released. This high volume
notice and takedown programme reduces internet traffic, and
therefore revenues, for the infringing sites as well as creating a large
number of “dead” links that make it more difficult for internet users to
find infringing content. In 2012, IFPI and its national groups identified
15.9 million infringing files for removal, an increase on 2011, despite
a decline in the overall number of links offered by cyberlockers.
While such an approach has a significant impact, it remains
an unsatisfactory and inefficient remedy to tackle massive
online infringement.
31
Digital Music Services Worldwide
The featured list of licensed digital music services appears on the Pro-Music information resource (www.pro-music.org) and is the
most comprehensive directory of the world’s legal music services. The list numbers around 500* licensed services in over 100 territories.
Afghanistan: Deezer Albania: Deezer Algeria: Deezer Andorra: Deezer Angola: Deezer Anguilla: iTunes
Antigua & Barbuda: Deezer, iTunes Argentina: BajГЎMГєsica, Batanga, Deezer, Faro Latino, iTunes, Larala, Movistar,
Personal, Sonora, Ubbi, Xbox Music, YouTube Armenia: Deezer, iTunes Australia: Bandit.fm, BBM Music, BigPond Music, Cartell
Download, DaDa, DanceMusicHub, Deezer, Fishpond, Getmusic, Guvera, iTunes, Jamster, JB Hi Fi NOW, Liveband, Mobile Active, MOG,
Music Unlimited, Nokia Music, Optus, Pandora, rara.com, Rdio, Samsung Music Hub, Spotify, The InSong, Third Mile, Ticketek Music, VEVO,
VidZone, Virgin, Xbox Music, YouTube, zdigital Austria: 3Music, 7digital, A1, AmazonMP3, Artistxite, Deezer, DG Webshop, eMusic,
Finetunes, iTunes, Jamba, JUKE, Ladezone, Last.fm, Mediamarkt, Musicload, Mycokemusic, MySpace, Nokia Music, Orange, Preiser,
rara.com, Saturn, Simfy, SMS.at, Soulseduction, Spotify, Telering, T-Mobile, VidZone, Weltbild, Xbox Music, YouTube, Zed, Zero Inch
Azerbaijan: Deezer, iTunes
A
Bahamas: Deezer, iTunes Bahrain: Deezer, iTunes Bangladesh: Deezer Barbados: Deezer, iTunes Belarus: Deezer,
iTunes, Yandex Music Belgium: 22tracks, 7digital, Beatport, Dance-Tunes, Deezer, DjTUNES, Downloadmusic.be, eMusic, Fnac,
iTunes, Jamba, Jamster, Juke, Junodownload, La Mediatheque, Legal Download, Music Unlimited, MUZU.TV, rara.com, Rdio, Simfy, Skynet,
Spotify, VidZone, Xbox Music, YouTube Belize: Deezer, iTunes Benin: Deezer Bermuda: iTunes Bhutan: Deezer Bolivia: Batanga,
Deezer, iTunes Bosnia and Herzegovina: Deezer Botswana: Deezer, iTunes Brazil: Deezer, Ideas Musik, iMusica, iTunes,
Mercado da Musica, MSN, Mundo Oi, Nokia Music, Power Music Club (GVT), rara.com, Rdio, Sonora, TIM, UOL Megastore, VEVO, Vivo, Xbox
Music, Yahoo! Music, YouTube British Virgin Islands: iTunes Brunei: Deezer, iTunes Bulgaria: 4fun, 7digital, Deezer, eMusic,
Globul, Hitbox, iTunes, M.Dir.bg, Mobiltel, Musicspace Burkina Faso: Deezer, iTunes Burundi: Deezer
B
C
Cambodia: Deezer, iTunes Cameroon: Deezer Canada: 7digital, Archambault, ArtistXite, AstralRadio, BBM Music, Bell ,
Blackberry Music, CBC Music, Classical Archives, Deezer, eMusic, Galaxie, iTunes, Mediazoic, Motime, Music Unlimited, Puretracks,
rara.com, Rdio, Siren Music, Slacker, Songza, TELUS, The Vault, VEVO, Xbox Music, YouTube, Zik Cape Verde: Deezer, iTunes Cayman
Islands: iTunes Central African Republic: Deezer Chad: Deezer Chile: Batanga, Bazuca, Claro, Deezer, Entel-Napster Mobile,
iTunes, Mimix, Movistar, Nokia Music, Portaldisc, Sonora, YouTube China: Baidu, China Mobile, China Unicom, Duomi, Kugou, Kuwo, Nokia
Comes With Music, Tencent, Xiami Chinese Taipei (Taiwan): Deezer, Emome, Far Eastone, Hami Music, iNDIEVOX, iTunes, KKBOX,
muziU, myMusic, Omusic, rara.com, Taiwan Mobile, VIBO, YouTube Colombia: Batanga, Codiscos, Deezer, ETB, Ideas Comcel Music Store,
iTunes, Movistar, Prodiscos, Sonora, Tigo Comoros: Deezer Costa Rica: Batanga, Deezer, iTunes Croatia: Cedeterija, Dallas Music
Shop, Deezer, Fonoteka Cyprus: 7digital, Deezer, eMusic, iTunes Czech Republic: 7digital, Bontonline, Clickmusic, Deezer, eMusic,
iTunes, Koule, MixГ©r.cz, MusicJet, O2, rara.com, Supraphonline, T-Mobile, YouTube
Democratic Republic of Congo: Deezer Denmark: BibZoom, Bilka, Deezer, eMusic, Inpoc, iTunes , M1, Music Unlimited,
rara.com, Rdio, Shop2download, Spotify, TDC Play, TouchDiva, VidZone, VoxHall, WavesOut, WiMP, Xbox Music, YouSeeMusik
Djibouti: Deezer Dominica: Deezer, iTunes Dominican Republic: Deezer, iTunes
D
East Timor: Deezer Ecuador: Batanga, Deezer, iTunes Egypt: Alamelphan, Deezer, iTunes, Mazzika Box El Salvador:
Batanga, Deezer, iTunes Equatorial Guinea: Deezer Eritrea: Deezer Estonia: 7digital, Deezer, eMusic, iTunes, rara.com,
Rdio Ethiopia: Deezer
E
Fiji: Deezer, iTunes Finland: 7digital, CDON , City Market CM, Deezer, Digianttila, download.MTV3.fi, eMusic, iTunes,
Music Unlimited, Nokia Music, NRJ Kauppa, rara.com, Rdio, Spotify, VidZone, Xbox Music France: 121 MusicStore,
7digital, AmazonMP3, Beatport, Beezik, Carrefour, cd1d, Cultura, Daily Motion, Deezer, Dogmazic, eMusic, Ezic, Fnac, Google Play, iTunes,
Jamendo, Jazz en ligne, Last.fm, MiooZic, Music Unlimited, musicMe, Musicovery, MyClubbingStore, MySurround, Nokia Music, Nuloop,
Off TV, Orange, Qobuz, rara.com, Rdio, Samsung Music Hub, SFR Music, Spotify, Starzik, VEVO, VidZone, Virgin, Xbox Music, Yasound,
YouTube, Zaoza
F
Gabon: Deezer Gambia: Deezer, iTunes Georgia: Deezer Germany: 7digital, AmazonMP3, Artistxite, Beatport, boomkat,
Classics Online, Clipfish, Deezer, digital-tunes, DJ Download, DJ Shop, djtunes, Elixic, eMusic, e-Plus unlimited, Eventim Music,
Finetunes, Google Play, Highresaudio, iTunes , Jamba, Juke, Junodownload, Last.fm, Linn, Maxdome, Mediamarkt, Medion, MTV,
G
*500 – although services are listed in every country they appear, they are only counted once in the overall figure e.g. iTunes is counted once in the figure of 500 etc.
32
GERMANY: Music Unlimited, Musicload, Musik Gratis, MUZU.TV, MyVideo, Napster, Naxos Music Jazz Library,
Naxos Music Library, Nokia Music, O2 Music, othermusic.com, primalrecords.com, Putpat, QTom, rara.com, Rdio,
Samsung Music Hub, Saturn, Schlager.tv, shop2download, Simfy, soulseduction, Spotify, tape.tv, T-Mobile, Tonspion.de,
trackitdown, traxsource, Videoload, VidZone, Vodafone, Weltbild, whatpeopleplay.com, WiMP, Xbox Music, Zero Inch, zwo3.net
Ghana: Deezer, iTunes Greece: 7digital, Akazoo, Cosmote, Deezer, eMusic, iTunes, mpGreek, Wind Grenada: Deezer, iTunes
Guatemala: Batanga, Deezer, iTunes Guinea: Deezer Guinea-Bissau: Deezer, iTunes Guyana: Deezer
Haiti: Deezer Honduras: Batanga, Deezer, iTunes Hong Kong: 3Music, CMHK Soliton, Deezer, Eolasia.com, hifitrack, iTunes,
KKBOX, Moov, Musicholic, MusicOne, Qlala, rara.com, SmartOne, Soliton, YouTube Hungary: Dalok, Deezer, Hungaroton, iTunes,
rara.com, Songo, YouTube, Zene! 24/7, Zenewebshop
H
Iceland: Deezer, Gogoyoko, Tonlist.is India: 7digital, Artist Aloud, Dhingana, Flyte (Flipkart), Gaana, In, IndiaONE, iTunes, Meridhun,
My Band, Nokia Music, Raaga, Saavn, Saregama, Smash Hits, TeluguOne Indonesia: Deezer, iTunes, YouTube Iraq: Deezer
Ireland: 7digital, ArtistXite, Bleep, Deezer, Eircom MusicHub, eMusic, Golden Discs, iTunes, Last.fm, Meteor Music Store, Music Unlimited,
MUZU.TV, MySpace, Nokia Music, rara.com, Spotify, VEVO, VidZone, We7, Xbox Music, YouTube Israel: iTunes, YouTube Italy: 7digital,
AmazonMP3, Azzurra Music, BBM Blackberry Music, Beatport, Cubo Musica, Deezer, eMusic, Esselunga MusicStore, Feezy, Google Play, IBS,
InnDigital, iTunes, Jamba, Juke, Last.fm, Music Unlimited, Net Music Media World, Nokia Music, Playme, rara.com, Samsung, MP3.it,
Music Hub, Spotify, VEVO, Xbox Music, YouTube Ivory Coast: Deezer
I
Jamaica: Deezer, REGGAEinc Japan: Aniloco, Beatport, Best Hit J-Pop, clubDAM, Dwango, Hudson, ICJ INC, iTunes, Lismo,
Listen Japan, mora, mu-mo, Music Airport, Music Unlimited, Music.jp, Musico, Musing, Naxos Music Library, NTT DoCoMo,
Oricon ME, Reco-Choku, Yamaha Music, YouTube JordaN: iTunes, Deezer
J
K
L
KAZAKHSTAN: Deezer, iTunes, Yandex Music Kenya: Deezer, iTunes Kiribati: Deezer Kuwait: Deezer Kyrgyzstan: Deezer, iTunes
Laos: Deezer, iTunes Latvia: 7digital, Deezer, eMusic, iTunes, rara.com Lebanon: Deezer, iTunes Lesotho: Deezer Liberia:
Deezer Libya: Deezer Liechtenstein: 7digital, Deezer Lithuania: 7digital, Deezer, eMusic, iTunes, rara.com Luxembourg:
7digital, Deezer, eMusic, iTunes, rara.com, Spotify, VidZone
Macau: iTunes Macedonia: Deezer Madagascar: Deezer Malawi: Deezer Malaysia: 7digital, Celcom Channel X,
Deezer, DigiMusic, Gua Muzik, Hypptunes, iTunes, KKBOX, Maxis Music Unlimited, rara.com, U Mobile Planet Music, Wowloud,
YouTube Maldives: Deezer Mali: Deezer Malta: 7digital, Deezer, eMusic, iTunes Marshall Islands: Deezer Mauritiana:
Deezer Mauritius: Deezer, iTunes Mexico: BBM Music, Coca-Cola FM, Corona Music, Deezer, Entretonos Movistar, EsMas Movil, Flycell,
Ideas ContesTone, Ideas Musik, Ideas Radio, Ideas Streaming, Ideas Telcel, iTodo, iTunes, Mientras Contesto de Iusacell, Mixup Digital,
Movistar, Nextel Shotsonline, Nokia Music, rara.com, Sonora, Terra Live Music, Terra TV, Xbox Music, YouTube Micronesia: Deezer,
iTunes Moldova: Deezer, iTunes Monaco: Deezer Mongolia: Deezer, iTunes Montenegro: Deezer Morocco: Deezer
Mozambique: Deezer, iTunes
M
Namibia: Deezer, iTunes Nauru: Deezer Nepal: Deezer, iTunes Netherlands: 7digital, Countdownload, Dance-Tunes,
Deezer, Downloadmusic.nl, eMusic, GlandigoMusic, iTunes, Jamba, Juke, Last.fm, legal download, Media Gigant, Mediamarkt,
Mikkimusic, MP3 Downloaden, MSN, MTV, Music Unlimited, Muziekweb, Nokia Music, Radio 538, rara.com, Rdio, Saturn, Spotify,
Talpadownloads, TuneTribe, VidZone, Xbox Music, You Make Music, YouTube, zazell.nl, Ziggo Muziek New Zealand: 7digital,
Amplifier, Bandit.fm, Deezer, Fishpond, iTunes, Mixtape, Music Unlimited, MySpace, Pandora, rara.com, Rdio, Spotify, Telecom Music Store,
The InSong, theaudience, VEVO, Xbox Music, YouTube Nicaragua: Batanga, Deezer, iTunes Niger: Deezer, iTunes Nigeria: Deezer,
iTunes Norway: 7digital, CDON, Deezer, iTunes, Jamba, Music Unlimited, Musicnodes, Musikkonline, Musikkverket Play,
Nokia Music, Platekompaniet, rara.com, Rdio, Spotify, Telenor Musikk, VidZone, WiMP, Xbox Music
N
O
P
Oman: Deezer, iTunes
Pakistan: Deezer Palau: Deezer Panama: Batanga, Deezer, iTunes Papua New Guinea: Deezer, iTunes Paraguay:
Batanga, Bluecaps, Claro, Deezer, iTunes, Personal, Tigo Peru: Batanga, Deezer, iTunes, Sonora Philippines: Globe, iTunes,
MyMusicStore, OPM2Go, Smart, Sun Poland: 7digital, Deezer, Empik.com, eMusic, interia muzyka, iplay, iTunes, Last.fm, Mood,
Muzo, Muzodajnia, MySpace, Nokia Music, Onet Muzyka, Orange, Play The Music, rara.com, Soho.pl, Spotify, T-Mobile, Tuba.pl, WiMP,
wp.pl muzyka, YouTube Portugal: 7digital, Beatport, Deezer, eMusic, iTunes, Jamba, Myway, Nokia Music, Optimus, QmГєsika,
rara.com, Rdio, SAPO/Musicaonline, Spotify, VidZone, Vodafone, Xbox Music
33
Q
R
Qatar: iTunes, Deezer
Republic of the Congo: Deezer Romania: 3Asi, 7digital, Best Music, Cosmote, Deezer, Get Music,
iTunes, Music Mall, Music Nonstop, Muzica.ro, Muzicabuna, Muzica9, Orange, Trilulilu, Zonga Russia: Beeline,
ClipYou.ru, Deezer, iTunes, iviMusic, Megafon (Trava), Muz.ru, Nokia Music, Tele2, Yandex Music, YouTube, Zvooq Rwanda: Deezer
S
Saint Kitts and Nevis: Deezer, iTunes Saint Lucia: Deezer Saint Vincent and the Grenadines: Deezer Samoa:
Deezer San Marino: Deezer Sao Tome and Principe: Deezer Saudi Arabia: iTunes, Deezer Senegal: Deezer
Serbia: Deezer Seychelles: Deezer Sierra Leone: Deezer Singapore: 7digital, Deezer, iTunes, KKBox, M 1 Music Store,
MeRadio, Nokia Music, rara.com, Singtel AMPed, Singtel Ideas, Starhub, YouTube, Slovakia: 7digital, Deezer, eMusic, iTunes, Music Jet,
Orange, Telekom, YouTube Slovenia: 7digital, Deezer, eMusic, iTunes, Orto Muziq Solomon Islands: Deezer Somalia: Deezer
South Africa: Deezer, DJs Only, iTunes, Just Music, Look & Listen, MTN Play, Nokia Music, rara.com, Rhythm Online, Simfy, ThatGig,
VEVO South Korea: Bugs, Cyworld BGM, Dal, Daum Music, Deezer, MelOn, Mnet, Monkey3, Naver Music, Ollehmusic, Soribada, Winky
Spain: 7digital, AmazonMP3, BBM Music, Beatport, Blinko, Dada, Deezer, eMusic, Google Play, iTunes, Last.fm, Mediamarkt, Movistar, MTV,
Music Unlimited, MUZU.TV, MySpace, Nokia Music, Olemovil, Orange, rara.com, Rdio, Samsung Music Hub, Spotify, Tuenti, VEVO, VidZone,
Xbox Music, YouTube Sri Lanka: iTunes, Deezer Suriname: Deezer Swaziland: Deezer, iTunes Sweden: 7digital, CDON, Deezer,
eClassical, eMusic, Gazell, iTunes, Klicktrack , Music Unlimited, Musikbiten, MySpace, Nokia Music, rara.com, Rdio, Sound Pollution, Spotify,
WiMP, Xbox Music Switzerland: 7digital, Akazoo, AmazonMP3, ArtistXite, Cede, Deezer, Ex Libris, Finetunes, Hitparade, iTunes, Jamster,
Juke, Musicload, Nokia Music, rara.com, Simfy, Spotify, Sunrise Joylife, VidZone, Weltbild, Xbox Music
T
Tajikistan: Deezer, iTunes Thailand: AIS, Deezer, DTAC, i-humm, iTunes, Music Combo, Music One, N-content, ThinkSmart,
True Digital, W Club Togo: Deezer Tonga: Deezer Trinidad and Tobago: Deezer, iTunes Tunisia: Deezer Turkey:
ArkadaЕџ YayД±ncД±lД±k, Avea Muzik, Daily Motion, Fizy.com, iTunes, Music Club, MГјzik iД°Г§in Efes, TTnetmuzik, Turkcell, Yandex Music, YouTube
Turkmenistan: Deezer, iTunes Tuvalu: Deezer
U
UAE: Deezer, iTunes Uganda: Deezer, iTunes UK: 3, 7digital, Amazing Tunes, AmazonMP3, ArtistXite, BBM Music, Beatport, Bleep,
Bloom.fm, Boomkat, BT Vision, Classical Archives, Classical.com, Classics Online, Dailymotion,Deezer , DJ Download, Drum & Bass
Arena, eMusic, Fairsharemusic, Google Play, Highresaudio, Historic Recordings, Imodownload, iTunes, Jamster, Jango, Junodownload, Karoo,
last.fm, Linn, Mobile Chilli, MSN, MTV, Music For Life (Talk Talk), Music Unlimited, Musicovery, MUZU.TV, My Music Anywhere, MySpace,
Napster, Naxos Music Library, Nectar Music Store, Nokia Music, Ooizit, Orange, Partymob, Play.com, Pure Music, rara.com, Rdio, Sainsburys
Entertainment, Samsung Music Hub, Spotify, Textatrack UK, The Classical Shop, T-Mobile, trackitdown, Traxsource, TuneTribe, VEVO, Vidzone,
Virgin, We7, Xbox Music, Yahoo! Music, YouTube Ukraine: Deezer, Djuice, iTunes, Last.fm, MUZon, Yandex Music, YouTube
United Republic of Tanzania: Deezer Uruguay: Antel MГєsica, Batanga, Butia, Claro, Deezer, La Rocola, Tmuy USA: 7digital,
Alltel Wireless, AmazonMP3, AOL Radio Plus, Ariama, Arkiv Music, ArtistXite, AT & T Wireless, BBM Music, BearShare, Beatport, CD Universe,
ChristianBook.com, Classical Archives, Cricket, Daily Motion, eMusic, Free All Music, Freegal Music, Google Play, Guvera, Hastings, Hdtracks,
Hulu, iMesh, Insound, iOldies, iTunes, Liquid Spins, MetroPCS, MOG, Moontaxi, Motime, MTV, Music Choice, MusicGivz, Music Unlimited,
Muve Music, MySpace, Myxer, Naxos, Nokia Music, rara.com, Rdio, Rhapsody, Samsung Music Hub, ScatterTunes, Slacker, Spotify, Sprint,
TheOverflow, T-Mobile, Turntable.fm, Verizon Wireless, VEVO, Virgin, Xbox Music, Yahoo! Music, YouTube Uzbekistan: Deezer, iTunes
V
Y
Z
Vanuatu: Deezer Venezuela: Batanga, Deezer, Ichamo, iTunes, Movistar Vietnam: Deezer, iTunes
Yemen: Deezer
Zambia: Deezer Zimbabwe: Deezer, iTunes
This is a list of digital music services from around the world that appears on the Pro-Music website (www.pro-music.org). Pro-Music is
endorsed by an alliance of organisations representing international record companies (majors and independents), publishers, performing
artists, and musicians’ unions.
The list is compiled by IFPI based on information from its national groups at time of publication. It does not purport to be exhaustive and
IFPI cannot guarantee its 100 per cent accuracy. Readers should consult www.pro-music.org for the most up to date information.
34
I
SIGHT AS WELL TRAVELED
AS YOUR MUSIC
NORTH AMERICA
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OCEANIA
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EUROPE
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www.nielsen-music.com
35
It’s been quite a year for Spotify.
Here are a few million reasons why…
в– Over one billion playlists created
в– 5 million subscribers and counting
в– $500 million paid to rightsholders to date
We couldn’t have done it without you.
Thanks from all of us at Spotify.

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